New research from the Legal & General MoneyMood Survey suggests household finances across the country appear worse than 12 months ago.
The number of households who say they are “struggling” (i.e. income not enough to pay bills) has risen to 3.5 million, over 800,000 higher than in October 2012.
Meanwhile, 18% of homes are struggling to make ends meet compared to 12% a year ago.
The number of “financially stable” households who are in a good position to save, i.e. homes that say they have “money left over after paying bills and debts” has fallen year on year.
From 2012 to 2013 the number of “stable” households in our survey fell from 44% to 40% – around half a million fewer homes.
John Pollock, CEO of Legal & General Assurance Society, said: “The reality of the UK today is that people are worse off despite the recovery in the economy, falling unemployment and lower inflation.
“The fact that household finances have taken a downturn over the last year is reflected in our MoneyMood survey.
Not only are we seeing that over 800,000 more households are struggling to make ends meet compared with last year, but our latest research shows a fall in the number of homes who can afford to save compared to a year ago. Falling unemployment and lower inflation figures for October are welcome news but do not appear to be feeding through to stronger household finances.
“The rising cost of fuel is likely to wipe out any benefits from falling prices for other goods and make balancing household finance even harder, especially for those with lower incomes. With one in three (34%) already saying they are in fuel poverty (based on the Govt. 10% indicator) the amount spent on fuel is likely to have a significant impact on how the less well off households cope with paying bills over the coming months.
“The East Midlands and London appear to be the regions most affected with one in four households who say they’re struggling to make ends meet.”